The system is just this rigged: Dark money, Citizens United and the secret story of how big money stole our democracy

Congressmen beg for bucks. Super PACs run the show. Dark money flows into state legislatures. This is why we're mad

Published March 20, 2016 10:00AM (EDT)

Bernie Sanders, Donald Trump   (AP/Steve Helber/Reuters/Chris Keane/Photo montage by Salon)
Bernie Sanders, Donald Trump (AP/Steve Helber/Reuters/Chris Keane/Photo montage by Salon)

Excerpted from "Nation on the Take: How Big Money Corrupts Our Democracy and What We Can Do About It"

D.C.’s Sweatshops

Not too far from the Capitol Hill townhouses are the call centers that both Democrats and Republicans use to dial for dollars. Endlessly.

This is how Senator Dick Durbin, Democrat of Illinois, described it: “We sit at these desks with stacks of names in front of us and short bios and histories of giving . . . and we make calls to our faithful friends and ask them to give money or host a fundraiser.”

National Public Radio tried to get access to the call centers for a story on fundraising in 2012 but got no further than a description of them from members of Congress.

Former representative Dennis Cardoza, a California Democrat, compared his party’s call center to a sweatshop with thirty-inch-wide cubicles set up for the sole purpose of begging for money. He said the need for constant fundraising helped push him into retirement.

Peter DeFazio, a Democrat from Oregon, told NPR, “If you walked in there, you would say, ‘Boy, this is about the worst looking, most abusive looking call center situation I’ve seen in my life.’ These people don’t have any workspace, the other person is virtually touching them.”

Members of both parties say the time they have to spend in the cramped call centers is humiliating. Representative John Larson, Democrat of Connecticut, likened it to “putting bamboo shoots under my fingernails.” One female member of the House told us that, probably because she’s a woman, when she makes her fundraising phone calls the donors are much more casual with her than she would expect—or hope. She recounted a call she made to a Hollywood mogul’s home. The wife answered the phone. After the congresswoman introduced herself, “The wife launched into a tirade about some new curtains that had just arrived at her house, which were the wrong color of yellow. I had to sit and politely, sympathetically, listen to her so that I could get to the point of asking her for a twenty-five-hundred-dollar contribution to my campaign.”

How much time do our elected representatives spend trying to collect money from wealthy people? Roughly 50 percent. One former congressman, Tom Perriello (D-VA), told reporter Ryan Grim at the Huffington Post that even that may be “low-balling the figure so as not to scare the new members too much.”

This feverish fundraising begins even before a freshman gets sworn in. After former representative Walt Minnick, a conservative Democrat from Iowa, won his first election to Congress in 2008, he took just five days off before heading back to the phones. He needed to raise $10,000 to $15,000 a day because his district is considered competitive and he 0x knew he would face a tough reelection. Many freshman members get right to the townhouse circuit before they even move into a Washington apartment.

The constant need for campaign cash not only greases the wheels in Congress for the well-financed special interests but also reduces the amount of time our legislators spend considering or crafting legislation.

Dan Glickman (D-KS) has seen it all, from all angles. He served in the House for eighteen years, representing the people of Wichita, Kansas, then headed the Department of Agriculture for six years, during Bill Clinton’s presidency, then became head of the Motion Picture Association of America, Hollywood’s lobbying and advocacy arm in D.C. According to Glickman,

The sad truth is that given the frenetic search for money in federal congressional elections,

there simply isn’t enough time in the day to stay competitive in campaign finance and do the actual job of policy making . . . I remember when I was first elected to Congress, I and many other House members would often go down to the floor of the House of Representatives and just listen to the debate. I may not have had an amendment to the bill or a particular interest in the issue but I always felt that watching policy discussions and witnessing the crafting of laws was an important part of my day. It gave me the chance to educate myself and interact with members of Congress on both sides of the aisle. Today most lawmakers would tell you that any free moment not used raising dollars is time wasted.

This theme of members of Congress not being able to commit time to doing the increasingly complicated job of examining and deeply understanding legislation comes up over and over again. It’s not just driving them nuts, it’s also driving many of them out of office, and it’s deterring good people from even thinking about running.

Senator George Voinovich, an Ohio Republican, left the U.S. Senate in 2010. At the press conference announcing his retirement, he said that it would be impossible to be an effective legislator while also meeting the fundraising demands of running for another term. “You can’t do both of them,” he said. “You’re either going to do the job or you’re going to be out there raising money.”

Of course, not all the fundraising occurs in dreary call center cubicles and trade-association-owned townhouses in D.C. As the New York Times investigative reporter Eric Lipton chronicled in 2014, “destination events” have become all the rage. Republicans join lobbyists and business executives for spa weekends in Las Vegas and ski trips at the Four Seasons resort in Vail. Democrats join lobbyists and business executives on the Ritz-Carlton’s private beach in Puerto Rico and on quail hunts in Georgia.

Such trips are often sponsored by political campaigns or political action committees, which are funded, in part, by . . . you guessed it: the lobbyists and corporate executives who are attending the festivities, and who have business interests they think the members of Congress might be able to help them with.

As Lipton reported, among those attending a Vail event in January of 2014 were:

Representative Edward Whitfield, Republican of Kentucky, and Katie Ott, a lobbyist for PPL Corporation, the single biggest contributor to Mr. Whitfield.

Mr. Whitfield is chairman of the Energy and Commerce subcommittee that regulates energy utilities, making him one of the most important players in Congress for the industry. Only days after the Vail trip, he introduced legislation that would allow utilities like PPL to build new coal-burning power plants, overriding environmental restrictions recently imposed by the Obama administration.

Super PAC Attack

Much of this type of activity—the endless fundraising phone calls, the in-person fundraising, the resort retreats—has been intensifying for years. Newer to the scene, though, are super PACs, which, as we discussed in the last chapter, are the progeny of Citizens United. One of the many things the five Supreme Court justices failed to envision was how closely super PACs would align with candidates’ campaigns—how these allegedly “independent expenditure” entities are not really independent from the candidates at all. Through skilled lawyers, operating in the dim light of an under-resourced and dysfunctional FEC, the candidates have, for all practical purposes, been able to treat these “independent” groups as extensions of their own campaigns.

Presciently, Harvard Law School professor Lawrence Lessig, in a September 2010 commentary for the Boston Review, wrote, “No doubt, as corporations exercise this new right, candidates will become skilled in the dance necessary to get enormous corporate wealth spent for their political benefit.”

It was widely reported in the spring and summer of 2015 that former Florida governor Jeb Bush was working closely with Right to Rise, a super PAC backing his bid for the 2016 Republican nomination. The group, with Bush’s direct help, raised $114 million in the first six months of its existence. Bush was able to coordinate with the group because he had not yet officially declared his candidacy. The rationale is laughably adolescent: if Jeb hasn’t officially filed paperwork for his campaign, then he’s not a candidate for office, so there’s no question that Right to Rise is “independent” of his campaign, because there’s no campaign to speak of. Kind of like a junior in high school saying to his parents, “I wasn’t in Jimmy’s basement when the cops broke up the party down there—I was in the kitchen.”

Watchdog groups led by the Campaign Legal Center and Democracy 21 filed complaints with the FEC, calling out not only Bush but also fellow Republicans Scott Walker and Rick Santorum and Democrat Martin O’Malley for flouting the law. “These 2016 presidential contenders must take the American people for fools—flying repeatedly to Iowa and New Hampshire to meet with party leaders and voters, hiring campaign staff, and raising millions of dollars from deep-pocketed mega donors, all the while denying that they are even ‘testing the waters’ of a presidential campaign,” said Paul S. Ryan, senior counsel for the Campaign Legal Center, adding that all four “appear to be violating federal law.”

In the spring of 2015, Bush’s team was reportedly hatching a plan to use his super PAC in an unprecedented way. It would take on tasks that a more accountable, traditional campaign would normally handle: setting up and running phone banks, arranging television advertising, and managing get-out-the-vote operations.

Richard L. Hasen, professor of law and political science at the University of California, Irvine, School of Law and author of Plutocrats United: Campaign Money, the Supreme Court, and the Distortion of American Elections, wrote for Slate, “By signaling that Right to Rise is his campaign arm, Jeb Bush has broken down the wall between his super PAC and his campaign committee in the eyes of donors.”

Outside spending on congressional races doubled from 2010 to 2014, when it reached a staggering $486 million, much of which went undisclosed. In 2004, the Center for Responsive Politics estimated about $5.8 million in dark money (undisclosed) spending. That’s a hundredfold increase over the course of ten years.

Money Goes Dark

Super PAC money is disclosed. So when journalists and political pundits talk about “dark money,” don’t think of super PACs. Think of 501(c)(4) organizations, many of which appear to be set up principally to engage in politics.

Dubbed “social welfare organizations” by the IRS, 501(c)(4)s are tax-exempt groups that aren’t required to disclose where their money comes from—a significant fact when you consider that some of the more powerful groups spend tens of millions of dollars each election cycle to advance a single issue or candidate.

In 1956, Alabama Attorney General John Patterson tried to compel the NAACP to disclose the names and addresses of its members in a blatant intimidation effort that would essentially shut down the organization’s income. When the NAACP refused, the issue went all the way to the Supreme Court, which unanimously ruled that the organization did not have to disclose the names of its donors, arguing that “compelled disclosure of affiliation with groups engaged in advocacy” could lead to an effective “restraint on freedom” in the form of persecution or retaliation.

In recent years, political operatives have taken advantage of this exemption from disclosure—combined with inaction on regulating 501(c)(4)s by the FEC and IRS—to turn the groups into stealth political bombers. As Matea Gold reported in the Washington Post in the summer of 2015, “These tax-exempt groups—which can keep their donors secret even as they sponsor hard-hitting ads—are being increasingly embraced by campaign operatives looking for new ways to influence the political environment.”

Groups like Priorities USA, founded by former Barack Obama staffers, and Americans for Prosperity, begun by the Koch brothers, have firmly taken root. The Republican political operative Karl Rove has run tens of millions of dollars through his (c)(4), called Crossroads GPS. New ones, with unmemorable names, are positioning themselves to play significant roles in 2016.

According to the Center for Responsive Politics, “spending by organizations that do not disclose their donors has increased from less than $5.2 million in 2006 to well over $300 million in the 2012 presidential cycle and more than $174 million in the 2014 midterms.” The New York Times editorial page noted, mournfully, that the 2014 midterm elections were affected by “the greatest wave of secret, special-interest money ever raised in a congressional election.”

Although such dark money is a growing problem—an extra shot of poison in an already poisonous mixture—it constituted just 4.6 percent of all campaign spending in 2014.

No Help on the Hill

The Supreme Court is, of course, not solely to blame for problems associated with Big Money. Congress has passed up opportunities to enact commonsense laws for decades. Lawmakers have even failed to pass a bill that would require the funders of groups placing political ads on television to be identified in the ads so that we citizens can know who is trying to influence our votes. Congressional Democrats have introduced such a bill several times since the Citizens United decision, but Republicans have consistently blocked it, primarily because of Senator Mitch McConnell (R-KY), who claimed in 2010 that Democrats were behind the bill solely to look like reformers. It’s hard to tell if that’s a fair criticism, but it seems the Democrats aren’t taking passage of the bill terribly seriously. The House version of the legislation is called the KOCH Act—Keep Our Campaigns Honest—a personal jab at the wealthy Koch brothers, which shows the lack of seriousness of the effort.

For nearly two decades, Mitch McConnell has been a staunch opponent of campaign finance rules. In 1999, the New York Times opened a story about McConnell with this:

A bill to overhaul the nation’s campaign finance laws is being debated on the floor of the Senate. Its advocates and their many allies on the editorial pages are in full cry, demanding change for the sake of a cleaner, better, more democratic politics. And the senior Senator from Kentucky, Mitch McConnell, is doing his best to block the bill.

So it went last week: Cheerfully, with conviction, with no apologies, Mr. McConnell stood in the well of the Senate, hour after hour, swatting back arguments that the system is corrupt, that it breeds cynicism, that it shuts out the little guy for the moneyed special interests.

“I have sort of been the designated spear catcher on this issue,” Mr. McConnell said, somewhat proudly.

McConnell has been more than a spear catcher on the issue; he’s been jamming spears through the skulls of bills that could fix the problem, including the DISCLOSE Act, despite the fact that, as evidenced by the 2015 New York Times/CBS News poll, 76 percent of Republicans support disclosure of all campaign contributors to outside political groups.

In addition to obstructing legislation, McConnell has engaged in other forms of spear catching. He brought a lawsuit challenging the McCain-Feingold law the day Congress passed it in 2002, arguing that it violated the First Amendment. The Supreme Court in 2006 ruled against him, but he mushed on nonetheless, praising Citizens United when it came down and filing amicus briefs on behalf of others seeking to weaken campaign finance laws.

Why he turned so spitefully against reform is unclear.

Interestingly, he was not originally opposed to campaign finance reform. He supported disclosure for decades. As a Republican Party county chairman in Louisville in 1973, he even advocated campaign spending limits and praised public financing efforts. In 1987, McConnell said he would support a constitutional amendment to allow Congress to regulate independent expenditures. In 1989, he sponsored a bill, with Senator Harry Reid (D-NV), that would have required outside groups to 0x disclose their donors.

President Obama hasn’t exactly been a champion of reform, either. Despite some of his strong rhetoric—for instance, his statement at a White House press conference in 2013 that “There aren’t a lot of functioning democracies around the world that work this way, where you can basically have millionaires and billionaires bankrolling whoever they want, however they want, in some cases undisclosed”—he has failed to champion the cause. For instance, despite repeated requests from Common Cause and more than fifty other organizations, President Obama (as of the writing of this book) has been unwilling to sign an executive order requiring that all companies receiving federal contracts disclose their political spending.

Other government entities that could help with some of the problems we discuss in this book never seem to get their act together. The Federal Election Commission is the most wretched of examples. The six members of the commission—three Democrats and three Republicans—must be approved by the Senate. As the atmosphere in Washington has become increasingly partisan, the FEC has, for all practical purposes, become paralyzed. A 2013 analysis by the Sunlight Foundation showed a sharp decrease in the dollar amount of fines levied against violators of campaign finance laws as well as a sharp decline in the number of cases commissioners could even agree to make a decision on. “It is dysfunctional,” a remarkably blunt Ann Ravel, the 2015 FEC chairwoman, told the New York Times. “The likelihood of the laws being enforced is slim.”

One of the main duties of the FEC, which was created by Congress in 1975 in the wake of Watergate, is to collect and disclose campaign finance information. Yet in recent years, Republicans and Democrats on the commission haven’t been able to agree on how to do that.

Ironically—or perhaps we should say pathetically—members of both parties did unite on at least one issue: letting wealthy people donate more to political parties. Late in 2014, the offices of Harry Reid (who was still Senate majority leader) and House Speaker John Boehner feverishly negotiated the specifics of a $1.1 trillion spending bill. At the very end of their chess game, they agreed to slip in language allowing people to give $1.5 million to the national parties per election. The move was seen as an attempt to strengthen the political parties, which have been overshadowed and outspent by outside funding. CNN called the measure “the latest in a string of setbacks for restrictions on money in politics.” House Minority Leader Nancy Pelosi, a Democrat, said it “would work to drown out the voices of the American people.” Boehner countered that it and other provisions were “worked out in a bipartisan, bicameral fashion or they wouldn’t be in the bill.”

Big Money Goes Local

We wish we could claim that coin-operated government exists only at the national level. Sadly, that’s not the case. Just as the influence industry has mushroomed in Washington in the last two decades, influence peddlers and political operatives have sought new ways to accomplish their agendas at the state and local levels. You will read, in future chapters, about specific ways in which money and influence place pressure on state and local legislators and regulators, but we want to flag the trend here:

Four years after the Supreme Court ruled that Congress cannot restrict spending by political groups not directly affiliated with candidates, the “Super PACs” and other spending committees that [have] sprung up in the wake of that decision are becoming a fixture in races farther down on ballot sheets, where their money can have a greater impact.

In some cases, they are looking to bypass a gridlocked Washington . . . In other cases, local operators are adopting tactics first developed at the national level.

That’s from a Reuters report, published in October 2014. Journalist Nicholas Confessore wrote the initial “trend piece” about this phenomenon in the New York Times earlier that year. In it he quoted the Republican strategist Ed Gillespie: “People who want to see policies enacted, and see things tried, are moving their activity to the states, and away from Washington. There is a sense that you can get things done.”

Another Ed—Ed Bender, who directs a watchdog group called the National Institute on Money in State Politics—called the migration of Big Money to the state and local level logical, but unfortunate. “It is less expensive than playing politics at the federal level and the odds of success are often way better,” Bender told us. Paul Ryan, a senior attorney at the nonpartisan watchdog group Campaign Legal Center, concurred: “It’s often the way things work in money and politics: practices are developed at the national and federal level, and those that work are replicated at the 0x state and municipal level.”

An investigation by the Center for Public Integrity found that just fifty individuals and organizations—from former New York City mayor Michael Bloomberg to the Democratic Governors Association—steered $440 million to state candidates and parties in 2014. Eighty-five percent of candidates who got donations from one of those fifty donors won.

Giving directly to state candidates, who raked in $1.2 billion in 2011– 2012, is often easier than giving to federal candidates, who can face tougher donation limits. Six states allow limitless giving directly to candidates, and another six have only slight restrictions. Data show that in states like California, Georgia, and South Carolina, all of which have high contribution limits, elections are less competitive. By contrast, elections in Maine, Arizona, and Minnesota, all of which have some form of public financing, are typically much more competitive.

State and local ballot measures attract some of the most deep-pocketed out-of-state business interests and individuals. In 2012, the amount that groups backing or opposing ballot measures raised approached $1 billion, an all-time high. In 2014, a mere fifty donors pumped $266 million into such efforts. More than three quarters of the donors were corporations.

Groups that represent well-financed business have been tilling the fields at the state level for quite some time. The American Legislative Exchange Council (ALEC) has promoted the causes of business interests who pay to be a part of its network for more than forty years. ALEC, which has been described as a “corporate bill mill,” connects business lobbyists and state legislators at posh retreats and conferences. It helps the lobbyists build connections with state legislators, then furnishes the legislators with model legislation, often drafted by the corporate lobbyists, to file in the form of actual bills. Regrettably, the legislators, many of whom can’t afford to travel to such resorts, and most of whom only work for the public part time, are more than happy to embrace the largesse of ALEC, as a reporter at a Savannah, Georgia, television station discovered while sitting at the bar at an ALEC retreat:

When I asked the state representative how he pays for a trip like this, he told me that ALEC picks up the hotel room and $350 in expenses directly. He has to come up with the rest, or tap into his ALEC state reimbursement fund.“This is where you would come in, ma’am,” he said, turning toward the lobbyist. “I’m the state chair of ALEC, and I look for financial supporters, lobbyists and the like such as yourself, to send us a couple thousand bucks every so often.”

Super PACs are also getting involved in city council and even school board elections across the country. A super PAC called the Committee for Economic Growth and Social Justice filed papers in Washington and promptly sent more than $150,000, funded largely by the bail bond industry, to unseat several members of a school board in Elizabeth, New Jersey. The PAC reportedly was launched by a state senator who wanted to kick his longtime rivals off the board.

An ally of the losing candidates was shocked.“We’ve never experienced or expected that outside interest groups would come in and invest this kind of money into a local school board race,” school board president Tony Monteiro told USA Today. “It boggles the mind . . . The whole landscape has changed.”

As the CNN reporter Teddy Schleifer, who covers money in politics, put it, “A century ago, party bosses ruled cities. Today, super PACs are in charge. Elections in the nation’s cities are increasingly the territory of deep-pocketed donors who are finding that a dollar spent in a low-cost municipal race can easily put an ally in power.”

Excerpted from "Nation on the Take: How Big Money Corrupts Our Democracy and What We Can Do About It" by Wendell Potter and Nick Penniman. Published by Bloomsbury USA. Copyright 2016 Wendell Potter and Nick Penniman. Reprinted with permission of the publisher. All rights reserved.

By Wendell Potter

Wendell Potter is the former vice president for corporate communications at Cigna. He is now president of Business for Medicare for All and author of bestselling books "Deadly Spin" and "Nation on the Take."

MORE FROM Wendell Potter

By Nick Penniman

Nick Penniman is executive director of the organization Issue One. He was previously publisher of the Washington Monthly and director of the Huffington Post Investigative Fund.

MORE FROM Nick Penniman

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